National Savings has made an arrangement with Deloitte & Touche to allow it access to 19 auditors as part of a drive to improve the quality of its financial reporting, write our parliamentary staff.
The deal follows repeated criticism by MPs. Last week, the Commons Public Accounts Committee told National Savings to employ more qualified accountants to ensure there is no repeat of financial reporting failures which left it £4.6m short of the assets needed to meet its liabilities to investors.
The committee also criticised the agency, which provides personal savings products, for having a standard of financial accounting that ‘fell some way short of what would be expected in a commercial bank’. It blamed a ‘lack of suitably trained and qualified staff’.
The MPs added: ‘The agency needs to make further progress to bring their qualified accounting resources up to their target level. There is also a need for further training of finance staff generally’.
The PAC remarked on the absence of audited accounts and the failure to produce accounts as promised from 1996/1997. It told the agency to closely monitor the financial reporting of the new outsourced contract with Siemens Business Services.
Responding to the report, National Savings said in a statement to Accountancy Age: ‘After implementing a root-and-branch investigation into these long-standing financial issues, we have introduced new control procedures and are reconciling on a daily basis.
‘We have restructured and strengthened our finance directorate which can now draw on a team of 19 auditors from Deloitte & Touche.
‘Under the public sector partnership with Siemens Business Services we have set demanding standards for internal control that match industry-best standards.
‘The partnership has also provided additional financially qualified resources to manage our operations and new investment to update our systems.
‘Also, this year for the first time we will be publishing comprehensive audited accounts for all our products’.
PAC chairman David Davis was unconvinced. ‘We will not accept any further failures by National Savings to meet deadlines for sorting out their financial reporting,’ he said.
‘National Savings investors have a right to expect that their money is protected from financial inadequacy. It is only by the agency using taxpayers’ money to investigate the problems, and make up the shortfall, that investors have not lost out so far.
‘In some ways National Savings is no different from a high street bank or building society. In terms of financial accounting, the agency should start acting like one.’
Although the committee accepted that National Savings had made ‘significant progress in addressing their financial reporting weaknesses’, it added that more needed to be done.
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